Yesterday, Bitcoin once again came close to the critical level of $20,000 per 1 BTC. Even the record-breaking increase in the interest rate of the Fed did not save the main cryptocurrency from falling. However, it could not save, since cryptocurrencies are a fairly young investment asset, which has not yet been affected by transition periods and changing phases of economic growth.
The crypto market continues to develop according to its own rules, remaining a speculative product, the high volatility of which attracts a large number of traders who are ready to take risks for the sake of quick earnings. Most often, such traders massively buy cryptocurrency during the growth phase and start to get rid of it just as massively when the market falls, which stimulates a further collapse.
But this time the situation is somewhat different. Many analysts are talking about the beginning of the “darkest time for crypto” in its entire history. The traditional opponents of bitcoin have also revived. Thus, the famous financier Warren Buffett recently stated:
“If I were now offered to buy bitcoins at $25, I would not take them. What should I do with them then? I would have to sell them back to you later. This is a dead end.”
And he added that he doesn’t know if bitcoin will rise or fall next year, in five or ten years, but he knows for sure that he does not produce anything.
The Open4business publication turned to Igor Stakovichenko, an expert in economics and finance, with a request to comment on the situation in the cryptocurrency market. According to the economist, the problem of the lack of a real resource and production base for digital assets has become especially acute in recent months. This is due to the fact that Russian aggression in Ukraine disrupted supply chains and led to higher prices for real sector products in the global economy.
“The fall in the capitalization of the largest companies and the crisis in the stock market naturally led to the collapse of the cryptocurrency market, as many investors considered this asset too risky,” the financier notes.
Stakovichenko stressed that in the current situation, the fall of the bitcoin market below 22,000 launched a new, even deeper “bearish phase” of the cycle, as it greatly shook the position of long-term holders of the asset. The long-term holders, who had held their positions during the last drops, could not stand it and started dumping the cue ball at the lowest prices.
“This shook the whole structure, and both technical and macroeconomic indicators today indicate a possible fall of the main cryptocurrency to 16,000 or even lower,” the expert said.
However, according to Stakovichenko, it is still too early to bury bitcoin, as “whales” (investors owning more than 10,000 BTC) still continue to accumulate this digital currency, which may indicate the possibility of growth in the medium and long term.
BITCOIN, CRYPTOCURRENCY, CRYPTOCURRENCY_MARKET, EXPERT, FINANCE, STAKOVICHENKO, ИГОРЬ_СТАКОВИЧЕНКО
The circulation of cryptocurrencies in Ukraine is UAH 1 billion per day, Maksym Demianiuk, the advisor to the Deputy Prime Minister of Ukraine and the Minister of Digital Transformation, said.
“If we are talking about the virtual asset market […], this is one of the most interesting and promising markets in the world […] If we are talking about where Ukraine is [unfortunately, this is unofficial information, it will appear only after regulation appears], then this is about UAH 1 billion per day,” he said during the Ukrainian Financial Forum.
According to him, cryptocurrencies are 50 times higher than deposits in Ukrainian hryvnia-denominated shares and securities excluding government domestic loan bonds.
“We cannot pretend that it does not exist [the cryptocurrency market in Ukraine], that is why in the last year and a half the Ministry of Digital Transformation has set itself the task of providing regulation of this market,” Demianiuk said, pointing out that the lack of legal regulation is the main problem in this issue.
The Council of the National Bank of Ukraine (NBU) at a meeting on June 23 called on the NBU Board and the Cabinet of Ministers to speed up the drafting of bills on the regulation of cryptocurrencies, NBU Council Head Bohdan Danylyshyn has said.
“The NBU Council, in particular, decided to approve the recommendations […] to the NBU Board and the Cabinet of Ministers in order to minimize the risks of macro-financial stability in connection with the spread of transactions with virtual assets, and to accelerate the preparation of legislative acts on the regulation of the market of virtual assets and transactions with them,” the head of the Council wrote on Facebook on Wednesday.
According to Danylyshyn, the Council also recommended the NBU Board to analyze the impact of the spread of transactions with virtual assets on the activities of central banks, in particular, on the monetary and financial stability polices, the development of payment technologies and the emergence of new regulatory processes (RegTech).
The index of use of virtual assets by the population of Ukraine is the highest in the world, according to a study by the analytical blockchain company The Chainalysis, posted on the website of the Ministry of Digital Transformation of Ukraine.
According to the report, when calculating the index, analysts took into account the cost of sent crypto assets per capita, the balances of crypto assets at the addresses (wallets) of Internet users in Ukraine, as well as the volume of P2P and retail transactions (<$ 10,000), calculated at purchasing power parity.
It is noted that the high performance of Ukraine is due, among other things, to the world's largest (the top three) community of blockchain developers, a significant crypto community, a high level of digital awareness of the population, as well as a high-quality educational intellectual basis and a significant number of small businesses that mediate on international marketplaces where cryptocurrency is used for payments.
In addition, the primacy was influenced by the presence of legal and banking system restrictions on international transfers and a number of restrictions in more traditional areas, in particular the non-availability of a stock market, limited access to the global capital market, and high entry into the real estate market.
"The market of virtual assets in Ukraine is quite developed and has a significant turnover even on a global scale, but most of it is concentrated in the shadow zone, which creates potential risks for both the state, business and users," the press service of the ministry said.
It added that the ministry continues to create a legal framework for regulating the cryptocurrency market in Ukraine and hopes that in September the profile draft law on virtual assets will be considered by the parliament.
The Chainalysis is the leading blockchain analytics company that provides blockchain data and analytics to government and financial institutions, as well as participants in the virtual asset market.
